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Google Buys Home-Automation Start-Up Nest for $3.2B in Cash

The maker of smart home-automation devices joins the Google family.

Google will acquire smart home-products startup Nest Labs in an effort to capitalize on the development of devices and mobile software for the connected home, the companies announced in separate statements today (see Nest’s release here and Google’s here). The $3.2 billion deal, which raised eyebrows among tech industry watchers, will allow Nest to retain its branding and to “continue to reimagine and reinvent the unloved products that proliferate our homes,” company co-founder and Apple alum Tony Fadell wrote in a blog post on Nest’s website announcing the acquisition.

The news comes three months after Nest launched its smart smoke detector, Protect, as well as an open API to fuel further product development. The company’s most recent round of funding, which includes investors DST Global and Google Ventures, is expected to raise $150 million and values the firm at $2 billion, Re/code reports. “The decision wasn’t made on a whim,” writes Fadell, noting that Google supported the development of Nest’s flagship product, the Learning Thermostat, and that Google led the company’s Series B and C financing rounds in 2011 and 2012, respectively.

On paper, at least, the partnership looks to be good for everyone. Nest receives access to Google’s resources and ability to scale while Google gets a corner on the market for high-end connected devices—plus, Gizmodo reports, Google gets Fadell, who “transformed a company with good design before,” referring to his work on spearheading Apple’s iPod design. Nest, too, is known for products with sleek interfaces that are designed to work with, rather than against, a home’s design scheme. Others argue that Google is after Nest’s power-consumption data, with plans to use the information to help streamline the smart grid around real consumer demand for electricity.

One item left to discuss, aside from what the pair will build together, is how Google will handle the home automation data it gathers from Nest’s Internet-connected devices. In a separate blog post announcing the deal, Nest co-founder and vice president of engineering, Matt Rogers, attempts to ease user concerns: “Our privacy policy clearly limits the use of customer information to providing and improving Nest’s products and services,” he writes. “We’ve always taken privacy seriously and this will not change.”